Wed, Apr 4, 2012, 10:21 am SL Time, ColomboPage News Desk, Sri Lanka.Apr 04, Colombo: Sri Lanka's Marxist party Janatha Vimukthi Peramuna (JVP) says the country is currently facing the worst economic crisis in history.
JVP parliamentarian Anura Kumara Dissanayake said the statistics revealed by the government with regard to economic indicators this year have all seen a complete change.
He observed that the government predicted an 8.5% growth in the economy this year, but three months into the year, the Central Bank Governor had to announce that the anticipated economic growth could not be achieved for this year.
The government says the rising global fuel prices, world economic crisis and US-imposed sanctions on Iran are all hindering Sri Lanka's economic growth this year.
The Central Bank lowered its projection for the country's economic growth rate to 7.2% from the earlier projected rate of 8%.
The JVP MP further noted that the government also boasted of US$ 8 billion foreign reserves, but it has now depleted to around US$ 5 billion, out of which savings amount to only US$ 1 billion while the rest are loans.
Referring to the development programs launched by the government, Dissanayake said the people have not been benefited by the mega development projects.
"The country has now been pushed towards a massive economic crisis," he said.
He added that the government has no option but to depend on loan facilities from the International Monetary Fund (IMF) although it claims there was no need for the loan.
"However, the measures taken are quite different. The rupee was devalued and later allowed to float. Fuel prices were increased. Five financial bills were urgently passed in parliament and they were immediately implemented and prices of vehicles have seen a massive increase as a result," Dissanayake said.
Escalating import expenditure leading to over US$ 9 billion trade deficit for 2011 and the Central Bank measures to keep the rupee from depreciating since last September had depleted the foreign reserves from a US$ 8 billion in last August to US$ 6 billion at present.
The imports increased substantially during the last year due to the expansion in domestic economic activity and increased the trade deficit higher than expected which led to implement the policy measures to devalue the rupee and let it free-fall, the Central Bank says.
The government slapped heavy taxes on vehicle imports since beginning of this month to curb the fuel imports and arrest the growing trade deficit.